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How do I donate a home in Spain?

A donation is made when the owner of a home gives the property to a new owner completely free of charge. This usually takes place between parents and children as an alternative to an inheritance, although it should kept in mind that donating a home involves the payment of taxes by both parties.

The main advantage of this type of regime is that the person who receives it can enjoy the property without the need for their parent to die, as the donor must be alive at the time of the transfer.

What are the steps to declare a house as a donation?

As it is an operation that is normally within the family, the process is very simple. All parties (donors and recipients) must sign the deed of donation before a notary, then the donation tax will be paid and the property will be registered in the name of the new owner.

What are the taxes on the part of the donor and the recipient of the donation?

The largest tax to be paid is the Inheritance and Gift Tax, which will be paid by the person receiving the donation.

In Spain, this tax is regulated by the different Autonomous Communities and has generated a great deal of controversy in recent months, as its legitimacy in cases of donations to direct relatives has been called into question.

Currently, some Autonomous Communities have established important deductions or bonuses for donations from parents to children, which can be up to almost 100%.

The person who receives the donation must also pay the tax known as PLUSVALIA to the town hall where the property is located.

On the other hand, the donor has the obligation to justify the capital gain of the donation in the tax return. Only in the case of a habitual residence and if the donor is over 65 years of age, he will be exempt from IRPF (Personal Income Tax).

What other particular cases may occur?

There are situations in which it is the parents themselves who decide to declare a house as a donation to avoid any disagreements between the heirs after their death.

In this case, it is important to know that the rules of inheritance apply to the donation, so that no child is harmed. If the country of residence of the donor has rules of lawfulness in favour of the children, the donation may not infringe this right of lawfulness.

It is also possible to make the donation with the right of life interest of the home. In this way, the parents have the right of life term while they are alive, and enjoy the home until that time, even if it is no longer in their name.

It is increasingly common to find people who consider donating a home instead of waiting for their children to inherit.  In these cases, factors such as the value of the home, or its location are important in determining the suitability of making a donation.

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